Unit Move and Minimum Fluctuation - Help Information

Traders have an intuitive feel for these terms, but precise definitions are scarce. Most traders know that Corn moves as 252, 253, 254, 255, with the difference between the numbers being worth $50, or that Lean Hogs move as 67, 68, 69, 70, with the difference between the numbers being worth $400 or that Bonds move in $1000 increments.

However, it is not always so obvious. Currencies and energy commodities have their major incremental move in the decimal part of the price. The minimum fluctuation is also confusing, as it's either not given, or given in ticks or other units. In some cases, multiple ticks make up one minimum fluctuation!

Knowledge of the unit move and the minimum fluctuation is essential in trading. They are needed to know the value of a move on a chart, to give trading orders with the correct price, to determine profit and loss and to determine profit and stop objectives.

At Trading Educators we define the term "Unit Move" as being a full-point move in the underlying futures.

Among the units commonly used for ticks are pt, ct, oz, c/bu, thpt, nd (1/32), index pt and ct/lb/cts/ton. What these units mean when looking at a chart or price quote is hard to know. Because of this, and since multiple ticks can make up a minimum fluctuation, ticks are not used in the Unit Move Table.

Instead of ticks or the many different units used in the exchanges' contract specifications, only one unit will be used, we call it "unit move." It is given the symbol "um". The minimum fluctuation is defined as a fraction the um.

These definitions are illustrated with two commodities: Corn and Hogs. Corn uses a fractional minimum fluctuation, Hogs uses a decimal. Here are examples of both price series, showing the unit move and the minimum fluctuation at work.

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